Legal Question in Credit and Debt Law in Massachusetts
4 years ago I signed a personal guaranty for a business loan from a private lender. The business went under, my building was foreclosed on. My health has gone drastically down hill, I can't work and am in the process of collecting disability. I received a 10 day demand letter from the lender's attorney threatening to attach my real estate, bank accounts, and personal belongings. I have absolutely nothing in my name of value except an 8 year old car that is beat.
What should I do?
2 Answers from Attorneys
You could do nothing. You are judgment-proof: The lender cannot seize assets you don't have, and depending on your age the lender cannot seize your car if it has equity less than $7,500 or $15,000. The lender cannot take any part of your Social Security income, if that's the type of disability you are applying for.
On the other hand, if the lender gets a judgment you'll have bad credit when it comes to getting a replacement car loan or any other credit extension. A bankruptcy filing will get rid of this loan no matter what stage any court proceeding is in.
First and foremost, the Attorney for the lender cannot attach your assets without a Court Order.
Second, you can send a letter to the Attorney that you do not have any assets and that you are applying for disability benefits and that the Attorney should stop contacting you about the debt. The Attorney may proceed with a lawsuit. However, if you do not have anything for the creditor to attach, the lawsuit is worthless.
Third, your disability benefit is 100% exempt from execution. This means that your creditors cannot garnish your benefits.
Fourth, you may choose to ignore the Attorney.
Fifth, you can file for bankruptcy protection to wipe out your personal guaranty for the debt.
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